Abstract
Purpose: The purpose of this study was to investigate challenges of import logistics outsourcing by manufacturing firms in Nairobi CountyMethodology: The research design of this study was a sample survey of the importers in the manufacturing industry as per the Kenya Association of Manufacturers. The total population of the companies in the manufacturing industry in Nairobi was 455 manufacturing firms. Primary data was collected via self-administered questionnaires with both open ended and closed questions that were designed to elicit specific responses for qualitative and quantitative analysis respectively. The data was analyzed by use of descriptive statistics.Results: The results indicated that the important reasons of outsourcing were satisfactory in explaining the decision by manufacturing companies to outsource. The reasons of outsourcing are a key determinant in deciding to outsource import logistics. The extent of challenges the importers face when importing services also determined the decision to outsource in the firms.Unique contribution to theory, practice and policy: The study recommends that the manufacturing firms should put more focus on core business functions and ensure reduction of overhead costs. They should take advantage of external expertise and experience and put measures to improve internal capabilities and expertise. The firms should reduce the total overall costs and where third party logistics providers provide a better service contract them. They should also emphasize on improved customer focus put measures to enable them compete effectively in the market.
Highlights
Outsourcing is in great demand in most companies due to the tremendous structural changes that have resulted to shrinking budgets, shrinking in house staff and downsizing
The results indicated that the important reasons of outsourcing were satisfactory in explaining the decision by manufacturing companies to outsource
The extent of challenges the importers face when importing services determined the decision to outsource in the firms
Summary
Outsourcing is in great demand in most companies due to the tremendous structural changes that have resulted to shrinking budgets, shrinking in house staff and downsizing. Companies have been outsourcing manufacturing operations, business services and even entire business lines for a long time (Graf & Mudambi, 2005). Many firms are using outsourcing as a strategic choice to improve company’s competitive position and in achieving business objectives through reduced costs, increased revenues and profits. It has emerged that companies that have used outsourcing makes gains in markets that would otherwise be uneconomical (Price Water House coopers, 1999). As companies seek to enhance their competitive positions in an increasingly global marketplace, they are discovering that they can cut costs and maintain quality by relying more on outside service providers for activities viewed as supplementary to their core business (Sinderman, 1995). Bender (1999) argues that the world has embraced outsourcing and that companies have adopted its principles to help them expand into other markets
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